Interim Management Statement

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H S B C H O L D I N G S P L C

Interim Management Statement – 1Q 2014

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7 May 2014

HSBC Holdings plc – I nterim Management Statement

HSBC Holdings plc (‘HSBC’) will be conducting a trading update conference call with analysts and

investors today to coincide with the release of this Interim Management Statement . The trading

update call will take place at 10.00am BST, and details of how to participate in the call and the live

audio webcast can be found below and at Investor Relations on www.hsbc.com.

Conference call details

Date: Wednesday, 7 May 2014

Time: 5.00am EDT

10.00am BST

5.00pm HKT

Audio webcast: Please follow this link for the webcast: http://www.hsbc.com/1/2/investor-relations

Speakers: Stuart Gulliver, Group Chief Executive

Iain Mackay, Group Finance Director

Conference details for investors and analysts: Passcode: HSBC

Toll Toll free

UK/International +44 (0) 1452 584 928 UK 0800 279 5983

USA +1 917 503 9902 USA 1866 629 0054

Hong Kong +852 3077 4624 Hong Kong 800 933 234

Replay conference call details (available until 6 June 2014): Passcode: 23525015#

Toll Toll free

International +44 (0) 1452 550 000

UK +44 (0) 8443 386 600 UK 0800 953 1533

USA +1 631 510 7499 USA 1866 247 4222

Hong Kong +852 5808 5558 Hong Kong 800 901 393

Investor Relations Media Relations

Guy Lewis Heidi AshleyTel: +44 (0) 20 7992 1938 Tel: +44 (0) 20 7992 2045Hugh Pye Gareth HewettTel: +852 2822 4908 Tel: +852 2822 4929




Interim Management Statement – 1Q 2014 (continued)

2

Table of contents

Highlights ........................................................................ 3 Summary consolidated balance sheet .............. ............. ... 13

Group Chief Executive’s comments ............. ............. ...... 5 Capital ............................................................................. 14

Geographical regions ....................................................... 6 Risk-weighted assets ....................................................... 15

Implementation of CRD IV ............. ............. ............. ...... 6 Profit/(loss) before tax by global business and

Underlying performance .................................................. 6 geographical region ..................................................... 18

Financial performance commentary ................................. 7 Summary information – global businesses . ............. ........ 19

Trading conditions since 31 March 2014 and outlook ..... 10 Summary information – geographical regions . ............. ... 24

Notes ................. ............. .............. ............. ............ ........... 11 Appendix – selected information ..................................... 29

Cautionary statement regarding forward-looking Loans and advances to customers by industry sector

statements .................................................................... 11 and by geographical region .................................... 29

Summary consolidated income statement ........................ 12

Terms and Abbreviations

1Q13 / 1Q14 First quarter of 2013 / 2014

4Q13 Fourth quarter of 2013

CET1 Common equity tier 1

CMB Commercial Banking

CML Consumer and Mortgage Lending in the US

CRD IV Capital Requirements Directive IV

CRS Card and Retail Services

DVA Debit valuation adjustment

FTEs Full-time equivalent staff

FX Foreign exchange

GB&M Global Banking and Markets

GMB Group Management Board

GPB Global Private Banking

HTS HSBC Technology and Services

IAS International Accounting Standard

Industrial Bank Industrial Bank Co., Limited

Legacy Credit A portfolio of assets comprising Solitaire Funding Limited, securities investment conduits, asset-backedsecurities trading and correlation portfolios and derivative transactions entered into with monoline insurers

LGD Loss given default

LICs Loan impairment and other credit risk provisions

NCOA Non-credit obligation assets

Own credit spread Fair value movements on our long-term debt designated at fair value resulting from changes in credit spread

PBT Profit before tax

Ping An Ping An Insurance (Group) Company of China, Ltd

PPI Payment Protection Insurance

PRA Prudential Regulation AuthorityPrincipal RBWM RBWM excluding the effects of the US run-off portfolio and the disposal of the CRS business in the US

RBWM Retail Banking and Wealth Management

RoRWA Pre-tax RoRWA is calculated using average RWAs on a Basel 2.5 basis for all periods up to and including31 December 2013 and on a CRD IV end point basis from 1 January 2014

RWAs Risk-weighted assets

US$m / US$bn United States dollar millions/billions

Note to editors

HSBC Holdings plc

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves

customers worldwide from over 6,300 offices in over 75 countries and territories in Europe, Asia, North and LatinAmerica, and the Middle East and North Africa. With assets of US$2,758bn at 31 March 2014, HSBC is one of the

world’s largest banking and financial services organisations.





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Highlights

Reported profit before tax (‘PBT’) down 20% in the first quarter of 2014 (‘1Q14’) at US$6,785m comparedwith US$8,434m in the same period in 2013 (‘1Q13’).

Underlying PBT was down US$968m or 13% in 1Q14 at US$6,621m, compared with US$7,589m in 1Q13,primarily reflecting the reduced impact of significant items (US$741m net reduction in PBT between 1Q13 and1Q14, comprising lower revenue items of US$1,076m and lower operating expense items of US$335m).

Earnings per share and dividends per ordinary share for the first quarter of 2014 were US$0.27 and US$0.10,respectively, compared with US$0.34 and US$0.10 for the equivalent period in 2013.

Return on average ordinary shareholders’ equity (annualised) was 3.2% lower at 11.7%, compared with 14.9%for the equivalent period in 2013.

Lower 1Q14 revenue – 1Q14 underlying revenue was US$15,709m, down 8% from US$17,135m in the same periodin 2013 mainly reflecting the reduced impact from significant items of US$1,076m. Excluding these items, revenuewas lower by US$350m or 2%, driven by Retail Banking and Wealth Management and Global Banking and Markets,partly offset by growth in Commercial Banking.

Further progress made on executing against strategy with market share gains in several product categories inGlobal Banking and Markets including equity and debt capital markets, advisory and lending. We also achievedpositive net new money in targeted areas of growth in Global Private Banking.

Lower 1Q14 underlying operating expenses – 1Q14 operating expenses were US$8,843m, down 2% fromUS$9,014m in the same period in 2013. Excluding significant items, operating expenses increased by 2% in partreflecting increased investment in Global Standards, Risk and Compliance, and inflation, partly offset by cost savinginitiatives.

Capital – at 1Q14, the CRD IV transitional basis CET1 capital ratio was 10.7%, down from 10.8% at 31 December2013, and the end point CET1 capital ratio was 10.8%, down from 10.9%. This largely reflected increased RWAsresulting from regulatory change.

Three months ended 31 March2014 2013 ChangeUS$m US$m %

Income statement and performance measures1

Reported profit before tax ........................................................................................ 6,785 8,434 (20)Underlying profit before tax ........ ............. ............ .............. ............. ............. ........... 6,621 7,589 (13)Profit attributable to ordinary shareholders of the parent company ........ .............. .... 5,069 6,211 (18)Cost efficiency ratio ................................................................................................. 55.7% 50.8% (10)Pre-tax return on average risk-weighted assets (annualised) .................................... 2.3% 3.1% (26)

At

31 March

2014

At31 December

2013

Change from31 December

2013 to31 March 2014

Capital and balance sheet2 CRD IV

Common equity tier 1 ratio (Year 1 transition) .................................................... 10.7% 10.8%Common equity tier 1 ratio (end point) ............ .............. ............. ............. ........... 10.8% 10.9%

Basel 2.5Core tier 1 ratio ............. ............. ............ .............. ............. ............. ............. ......... 13.6%

US$m US$m US$m

Loans and advances to customers ............ ............. .............. ............. ............. ........... 1,009,830 992,089 17,741Customer accounts ................................................................................................... 1,366,034 1,361,297 4,737CRD IV risk-weighted assets ................................................................................... 1,257,672 1,214,939 42,733

1 All on a reported basis, unless otherwise stated. Underlying basis eliminates effects of foreign currency translation differences, acquisitions, disposals and

changes in ownership levels of subsidiaries, associates, joint ventures and businesses, and changes in fair value (‘FV’) due to movements in credit spread onown long-term debt issued by the Group and designated at fair value. A reconciliation of reported results to underlying results is shown on page 7.

2 For details of the implementation of CRD IV, see page 6.





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Reconciliation of reported and underlying PBT

Quarter ended 31 March

2014 2013

US$m US$mReported

Revenue1 ............................................................................................................................................... 15,884 18,416

Loan impairment charges and other credit risk provisions ............................................................................ (798) (1,171)

Operating expenses ............................................................................................................................... (8,852) (9,347)

Profit before tax .................................................................................................................................... 6,785 8,434

Underlying adjustments to reported PBT

Reported profit before tax ..................................................................................................................... 6,785 8,434

Fair value movements on own debt ................................................................................................. (148) 243

Gain on de-recognition of Industrial Bank as an associate ....... ............. ............. ............. ............. ... – (1,089)

Gain on sale of associate shareholdings in Bao Viet Holdings ........................................................ – (104)

Loss on sale of Household Insurance Group’s insurance manufacturing business ............ ............. . – 99

Gain on disposal of Colombia operations ........................................................................................ (18) –

Operating results of disposals, acquisitions and dilutions ................................................................ 2 73Currency translation ........................................................................................................................ – (67)

Underlying profit before tax .............. ............. ............. ............. ............. ............. .............. ............. ....... 6,621 7,589

Underlying

Revenue1 ............................................................................................................................................... 15,709 17,135

Loan impairment charges and other credit risk provisions ............................................................................ (796) (1,072)

Operating expenses ............................................................................................................................... (8,843) (9,014)

Profit before tax .................................................................................................................................... 6,621 7,589

Significant items (on a reported basis)

Quarter ended 31 March

2014 2013

US$m US$m

Included in underlying profit before tax are:

Revenue1

Net gain on completion of Ping An disposal2 ............................................................................... – 553

Write-off of allocated goodwill relating to GPB Monaco business3 ............................................. – (279)

FX gains relating to the sterling debt issued by HSBC Holdings .................................................. – 442

Debit valuation adjustment on derivative contracts .... ............. ............. ............. ............. ............. . 31 472

Fair value movement on non-qualifying hedges ........................................................................... (142) 84

Loss on early termination of cash flow hedges in the US run-off portfolio .............. ............. ....... – (199)

Loss on sale of an HFC Bank UK secured loan portfolio ............................................................. – (138)

Loss on sale of several tranches of real estate secured accounts in the US ............ .............. ......... (30) –

Total ............................................................................................................................................. (141) 935

Operating costs

UK customer redress programmes ................................................................................................ 83 164

Of whichPPI ........................................................................................................................................... 83 113

Restructuring and other related costs ............................................................................................ 40 75

Regulatory investigation provisions in GPB ................................................................................. – 119

US customer remediation provision relating to CRS .................................................................... – 100

Total ............................................................................................................................................. 123 458

1 Net operating income before loan impairment charges, also referred to as ‘revenue’.2 The gain of US$553m represents the net impact of the disposal of available-for-sale investments in Ping An offset by adverse changes in

fair value of the contingent forward sale contract to the point of delivery of the shares.

3 In 1Q13, the private banking operations of HSBC Private Bank Holdings (Suisse) SA in Monaco were classified as held for sale. At thistime a loss on reclassification to held for sale was recognised following a write down in the value of goodwill allocated to the operation.

Following a strategic review we decided to retain the operation and the assets and liabilities of the business were reclassified to the

relevant balance sheet categories; however, the loss on classification was not reversed.





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Group Chief Executive, Stuart Gulliver, commented:

"In the first quarter we maintained control of costs and further demonstrated our capital resilience. Whilst revenue

was lower than the previous year's first quarter, which benefited from a number of specific items, we have seenprogress in revenue over the trailing quarters. Loan impairment charges fell, reflecting the changes to the portfolio

since 2011. Our return on equity was 11.7%.

"Global Banking and Markets had a relatively good performance and we grew our market share in several product

categories. Commercial Banking saw revenue growth but, in our Principal Retail Banking and Wealth

Management business, revenues were impacted by changes in incentive plans and product pricing."





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Geographical regions

Hong Kong and Rest of Asia-Pacific are no longer

regarded as separate reportable operating segments,

having considered the geographical financialinformation presented to the GMB. From 1 January

2014, they have been replaced by a new operating

segment ‘Asia’, which better aligns with internal

management information used for evaluation when

making business decisions and resource allocations.

Comparative data have been re-presented to reflect

this change.

Implementation of CRD IV

On 1 January 2014, CRD IV came into force and

capital and RWAs at 31 March 2014 are calculated

and presented on this basis. Prior to this date, capital

and RWAs were calculated and presented on a Basel

2.5 basis. In addition, capital and RWAs at

31 December 2013 were also estimated based on the

Group’s interpretation of final CRD IV legislation

and final rules issued by the PRA, details of which

can be found in the basis of preparation on page 324

of the Annual Report and Accounts 2013.

Underlying performance

Underlying performance:

adjusts for the period-on-period effects offoreign currency translation;

eliminates the fair value movements on our

long-term debt attributable to own credit spread

where the net result of such movements will be

zero upon maturity of the debt. This does not

include fair value changes due to own credit risk

in respect of trading liabilities or derivative

liabilities; and

adjusts for acquisitions, disposals and changes

of ownership levels of subsidiaries, associates,

joint ventures and businesses.

For acquisitions, disposals and changes of

ownership levels of subsidiaries, associates, joint

ventures and businesses, we eliminate the gain or

loss on disposal or dilution and any associated gain

or loss on reclassification or impairment recognised

in the period incurred, and remove the operating

profit or loss of the acquired, disposed of or diluted

subsidiaries, associates, joint ventures and

businesses from all the periods presented so we can

view results on a like-for-like basis. Disposal of

investments other than those included in the above

definition do not lead to underlying adjustments.

Reconciliation of reported and underlying revenue

Quarter ended

31 Mar

2014

31 Mar

2013 Change

31 Dec

2013 Change

US$m US$m % US$m %

Reported revenue ......................................................... 15,884 18,416 (14) 15,195 5

Currency translation adjustment1 ............. ............. ....... (294) (107)

Own credit spread ........................................................ (148) 243 652

Acquisitions, disposals and dilutions .............................. (27) (1,230) (1,120)

Underlying revenue ..................................................... 15,709 17,135 (8) 14,620 7

Reconciliation of reported and underlying LICs

Quarter ended

31 Mar

2014

31 Mar

2013 Change

31 Dec

2013 Change

US$m US$m % US$m %

Reported LICs ............................................................. (798) (1,171) 32 (1,140) 30

Currency translation adjustment1 ............. ............. ....... 75 29

Acquisitions, disposals and dilutions .............................. 2 24 6

Underlying LICs .......................................................... (796) (1,072) 26 (1,105) 28





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Reconciliation of reported and underlying operating expenses

Quarter ended

31 Mar

2014

31 Mar

2013 Change

31 Dec

2013 ChangeUS$m US$m % US$m %

Reported operating expenses ....... ............. ............ ....... (8,852) (9,347) 5 (10,573) 16

Currency translation adjustment1 ............. ............. ....... 141 44

Acquisitions, disposals and dilutions .............................. 9 192 36

Underlying operating expenses .................................... (8,843) (9,014) 2 (10,493) 16

Underlying cost efficiency ratio ................................... 56.3% 52.6% 71.8%

Reconciliation of reported and underlying profit before tax

Quarter ended

31 Mar

2014

31 Mar

2013 Change

31 Dec

2013 Change

US$m US$m % US$m %

Reported profit before tax ............................................ 6,785 8,434 (20) 3,964 71

Currency translation adjustment1 ............. ............. ....... (67) (35)

Own credit spread ........................................................ (148) 243 652

Acquisitions, disposals and dilutions .............................. (16) (1,021) (1,081)

Underlying profit before tax ............ ............. ............. .. 6,621 7,589 (13) 3,500 89

1 ‘Currency translation adjustment’ is the effect of translating the results of subsidiaries and associates for the previous period at the

average rates of exchange applicable in the current period.

Financial performance commentary

1Q14 compared with 1Q13

Reported profit before tax of US$6.8bn in

1Q14 was US$1.6bn or 20% lower than in

1Q13, primarily reflecting lower gains (net of

losses) from disposals and reclassifications.

Notably, our results in 1Q13 included a

US$1.1bn accounting gain arising from the

reclassification of Industrial Bank as a financial

investment following its issue of additional

share capital to third parties. This was partly

offset in 1Q14 by favourable fair value

movements of US$0.1bn on our own debt

designated at fair value resulting from changes

in credit spreads compared with adverse

movements of US$0.2bn in 1Q13.

On an underlying basis, profit before tax was

US$1.0bn or 13% lower than in 1Q13. This was

primarily driven by lower revenue, partly offset

by lower LICs and operating expenses.

Reported revenue was US$15.9bn in 1Q14,

US$2.5bn lower than in 1Q13, in part reflecting

lower gains (net of losses) from disposals and

reclassifications. On an underlying basis,

revenue of US$15.7bn was US$1.4bn or 8%

lower driven by a number of significant items

which were recorded in 1Q13, as follows: a net gain on completion of the Ping An

disposal of US$553m; and

foreign exchange gains on sterling debt

issued by HSBC Holdings of US$442m.

This was partly offset by:

a loss of US$279m recognised following

the write-off of allocated goodwill relating

to our GPB business in Monaco;

a loss of US$199m on early termination of

cash flow hedges in the US run-off portfolio

in RBWM; and

a loss on the sale of an HFC Bank UK

secured loan portfolio of US$138m.

In addition, 1Q14 revenue included:

a favourable DVA of US$31m (compared

with US$472m in 1Q13) in GB&M onderivative contracts;

adverse fair value movements on non-

qualifying hedges of US$142m compared

with favourable movements of US$84m in

1Q13; and

a loss of US$30m on sales of several

tranches of real estate secured accounts in

the US run-off portfolio in RBWM.

Excluding these items, revenue was US$0.4bn

lower:

in RBWM, revenue was US$0.3bn lower

reflecting reduced net interest income

following the sale of the non-real estate





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portfolio in 2013 and lower average

balances in the US run-off portfolio. In

our Principal RBWM business, revenue

decreased by US$0.1bn, mainly reflectingthe run-off of our Canadian consumer

finance business, lower mortgage fees in the

US and lower overdrafts and investment

fees in Europe. These factors were partly

offset by higher revenue from savings and

deposits, mainly in Europe and Asia;

in GB&M, total revenue was US$0.2bn or

4% lower, although this included higher

revenue in Legacy Credit of US$0.1bn as

we actively managed the portfolio. The

reduction in revenue was driven by a

decrease of US$0.2bn in Balance SheetManagement, as 1Q13 included higher

gains from the re-positioning of the

portfolio for risk management purposes.

Although market conditions were

challenging, GB&M increased market share

in several product categories including

equity and debt capital markets, advisory

and lending. However, overall revenue in

Capital Financing decreased as volume

growth across the business was more than

offset by spread and fee compression.

Revenue in Rates, Foreign Exchange and

Credit also fell as these businesses were

affected by subdued activity levels. By

contrast, revenue grew in our Equities

business as client flows increased; and

in GPB, revenue was US$0.1bn lower,

reflecting a managed reduction in client

assets as we continued to reposition the

business, which led to a reduction in fee and

trading income. We attracted positive net

new money in areas that we have targeted

for growth, including our home and priority

markets and the high net worth client

segment.

These factors were partly offset by:

CMB, where revenue rose by US$0.2bn.

This was primarily due to higher net interest

income, mainly in Asia from average

balance sheet growth and in the UK from a

rise in deposit balances and wider lending

spreads. In addition, revenue grew from

increased collaboration with GB&M,

notably in Asia, and from higher term

lending fees in the UK.

LICs of US$0.8bn were US$0.4bn lower than in

1Q13 on a reported basis, and US$0.3bn lower

on an underlying basis, primarily from

reductions in North America and Europe.

In North America, the decrease of

US$0.3bn reflected reduced balancesand lower levels of new impaired loans

in the US run-off portfolio, together with

improvements in US housing market

conditions, although the rate of

improvement was lower than in 2013.

In Europe, the decrease of US$0.1bn was

mainly driven by lower specific impairments

in CMB in the UK.

Reported operating expenses in 1Q14 of

US$8.9bn were 5% lower than in 1Q13. On

an underlying basis, operating expenses fell byUS$0.2bn, reflecting the effect of significant

items:

the non-recurrence of regulatory

investigation provisions in GPB recorded

in 1Q13 of US$119m;

a customer remediation provision connected

to our former CRS business recorded in

1Q13 of US$100m;

lower UK customer redress programme

charges of US$83m compared with

US$164m in 1Q13. Charges for the periodincluded estimated redress for possible

mis-selling in previous years in respect of

PPI; and

lower restructuring and other related costs

of US$35m.

Excluding these items, operating expenses were

2% higher than in 1Q13 reflecting increased

investment in Global Standards, Risk and

Compliance and wage inflation, partly offset

by cost saving initiatives.

Our cost efficiency ratio increased by 4.9 percentage points on a reported basis to 55.7%and by 3.7 percentage points to 56.3% on anunderlying basis reflecting lower revenue.

The number of FTEs at the end of the quarter

was 255,200, an increase of 1,100 on

31 December 2013, reflecting continued

investment in Global Standards, Compliance

and business growth initiatives, primarily in

RBWM and CMB, partly offset by sustainable

savings initiatives and the disposal of our

operations in Colombia.

The effective tax rate of 18.8% was lower than

the UK corporation tax rate of 21.5%. This

reflected the recurring benefits from tax exempt





9

income from government bonds held in a

number of Group entities and the recognition

of the Group’s share of post-tax profits of

associates and joint ventures within the Group’s pre-tax income. The lower effective tax rate

in 1Q13 of 15.7% was driven by the benefits

arising from the non-taxable gain on profits

associated with the reclassification of Industrial

Bank as a financial investment and the Ping An

sale.

On 7 May 2014, the Board announced a first

interim dividend for 2014 of US$0.10 per

ordinary share.

1Q14 compared with 4Q13

Reported profit before tax was US$2.8bn or

71% higher than in 4Q13, despite lower gains

(net of losses) from disposals of US$18m

compared with US$1.0bn in 4Q13 which

primarily arose from the sale of our Panama

operations. 1Q14 included favourable fair value

movements of US$0.1bn on own credit spread

compared with adverse movements of US$0.7bn

in 4Q13.

On an underlying basis, profit before tax

was US$3.1bn or 89% higher than in 4Q13,

reflecting higher revenue and lower LICs and

operating expenses.

Reported revenue of US$15.9bn in 1Q14

was 5% higher than in 4Q13. On an underlying

basis, revenue was US$1.1bn or 7% higher,

driven by GB&M. This was notably in Rates,

Foreign Exchange and Credit following

particularly muted customer activity in 4Q13

compared with 1Q14.

LICs were US$0.3bn lower than in 4Q13

on both a reported and underlying basis. LICs

fell in the majority of our regions, notably by

US$0.2bn in Latin America reflecting lowerspecific impairments in CMB in Mexico relating

to homebuilders due to a change in public

housing policy in 2013, and in Brazil across

a number of corporate exposures. In North

America, LICs fell by US$0.1bn, mainly driven

by lower collective charges in the US, in part

reflecting the CML portfolio run-off.

Operating expenses for 1Q14 were US$1.7bn

lower than in 4Q13 on a reported basis and

US$1.6bn lower on an underlying basis. This

primarily reflected a number of significant items

including the bank levy of US$0.9bn recordedin 4Q13, lower UK customer redress charges of

US$0.3bn and a decrease in restructuring and

related costs. The remaining operating expenses

were US$0.3bn lower, primarily reflecting

incremental cost saving initiatives.

Balance sheet commentary

Reported loans and advances to customers

increased by US$17.7bn in the quarter.

Excluding FX movements of US$2.2bn,

the growth was driven by GB&M and CMB

customers in Asia, relating to term lending. In

addition, there was growth in Europe in GB&M

from Capital Financing and corporate overdraft

balances that did not meet the criteria for

netting, partly offset by a reduction in credit

card balances in RBWM and a fall in CMB

lending.

Reported customer accounts balances were

broadly unchanged during 1Q14, with growth in

Europe offset by a decrease in North America.

The increase in Europe was driven by growth in

balances in GB&M that did not meet the criteria

for netting and an increase in RBWM. In North

America, the fall in balances primarily reflected

re-pricing.

Other significant balance sheet movements in

the quarter included a rise in trading assets and

liabilities, mainly in Europe and North America.

This reflected an increase in customer activity

and a resultant increase in settlement account

balances.

Capital and risk-weighted assets

On 1 January 2014, CRD IV came into effect,

implementing the Basel III framework within the

European Union.

At 1Q14, the CRD IV transitional basis CET1

capital ratio reduced to 10.7%, from 10.8% at

31 December 2013. Similarly the end-point CET1

capital ratio reduced to 10.8% from 10.9%. Thislargely reflected increased RWAs resulting from

regulatory change.

Internal capital generation contributed US$4.5bn

to CRD IV end point CET 1 capital, being profits

attributable to shareholders of the parent company

after regulatory adjustment for own credit spread and

net of the first interim dividend. The dividend is net

of planned scrip, and we have benefited from a

higher fourth interim dividend scrip take-up.

On 1 January 2014, the move from the historical

regulatory regime to a CRD IV transitional basisincreased RWAs by US$122.2bn. This movement

mainly consisted of credit valuation adjustment,

asset value correlation, amounts in aggregate below





10

the capital threshold risk-weighted at 250% and

selected securitisation positions which moved from

capital deductions to RWAs.

Selected portfolios with low default historywere subject to PRA LGD floors, with an impact

of US$17.3bn in RWAs; this is reported under

methodology and policy changes. In addition,

the PRA required a floor to be applied to the UK

corporate LGD model, resulting in an increase in

RWAs of US$17.1bn, as reported under model

updates.

Business growth in CMB and GB&M in Asia

and Europe from higher term lending to corporate

customers increased RWAs by US$7.3bn, while

additional increases occurred for corporate and

sovereign exposures in Asia resulting from adverse

movements in customer credit standing with an

RWA impact of US$2.3bn.

Internal ratings-based (‘IRB’) RWA reductions

of US$10.1bn from internal updates related to

immaterial portfolios moving to the Standardised

approach, with a reduction in IRB RWAs of

US$4.8bn and methodology changes associated

with trade finance products which accounted for

a reduction in RWAs of US$4.6bn. Immaterial

portfolios moving to the Standardised approach

increased Standardised RWAs by US$6.0bn.

US retail run-off portfolio RWAs reduced by

US$8.2bn as a result of a combination of factors,

including the implementation of new risk models

for the mortgage portfolios and favourable shifts

in portfolio quality, as lower quality exposures

continue to run off.

Net interest margin

Net interest margin was lower than in 1Q13 as a

result of lower yields on customer lending, primarily

in North America and Latin America. In North

America this was driven by the effect of thedisposals of the CML non-real estate loan portfolio

and select tranches of CML first lien mortgages

in the US in 2013. Both North America and Latin

America were also affected by a change in the

composition of their lending portfolios as they

focused on growing secured, lower yielding

balances, for both corporate and Premier customers.

Yields on customer lending also fell in Europe and

Asia, although to a lesser extent. However, yields onour surplus liquidity increased, notably in Asia, in

line with market rate rises in mainland China and

active management of our portfolios.

Cost of funds on customer accounts fell, albeit

to a lesser extent than yields on customer lending,

across most regions. In addition, the cost of debt

issued by the Group decreased, primarily in Europe

and in North America, as higher cost funding

matured. The effects of these reductions were

partially offset by an increase in the cost of funds

in Latin America from rising interest rates in Brazil

and from the continued change in the funding base,substituting wholesale deposits for medium-term

notes.

In addition, the net interest margin reduced due

to the significant increase in reverse repurchase

agreements and repurchase agreements arising from

the change in 4Q13 in the way that GB&M manage

these activities. This had the effect of increasing

average interest-earning assets, without a

correspondingly large increase in net interest

income, as these agreements are typically lower-

yielding and have a lower cost of funds than the rest

of the portfolio.

The decline in net interest margin from 4Q13

was lower than the reduction experienced from

1Q13 and was driven by North America and Latin

America. It similarly reflected the change in the

composition of lending portfolios, both as a result

of disposals of selected tranches of CML first lien

mortgages in the US during 4Q13 and the continued

shift towards secured, lower-yielding balances in

both regions, as noted above. Additionally, Latin

America was affected by a significant rise in its

cost of funds, as interest rates rose in Brazil.

Trading conditions since 31 March 2014 and outlook

We continued to experience muted customer activity

in April.





11

Notes

Income statement comparisons, unless stated otherwise, are between the quarter ended 31 March 2014 and the quarter ended31 March 2013. Balance sheet comparisons, unless otherwise stated, are between balances at 31 March 2014 and the corresponding balances at 31 December 2013.

The financial information on which this Interim Management Statement is based, and the data set out in the appendix to thisstatement, are unaudited and have been prepared in accordance with HSBC’s significant accounting policies as described in the Annual Report and Accounts 2013, with the exception of the adoption of the following new or revised standards: On 1 January 2014HSBC adopted amendments to IAS 32 ‘Offsetting Financial assets and Financial Liabilities’ which clarified the requirements foroffsetting financial instruments and addressed inconsistencies in current market practice when applying the offsetting criteria inIAS 32 ‘Financial Instruments: Presentation’. The amendments have been applied retrospectively and have not had a material effecton HSBC’s financial statements.

The Board has adopted a policy of paying quarterly interim dividends on the ordinary shares. Under this policy, it is intended to havea pattern of three equal interim dividends with a variable fourth interim dividend. Dividends are declared in US dollars and, at theelection of the shareholder, paid in cash in one of, or in a combination of, US dollars, sterling and Hong Kong dollars or, subject tothe Board’s determination that a scrip dividend is to be offered in respect of that dividend, may be satisfied in whole or in part by theissue of new shares in lieu of a cash dividend.

Interim Report 2014 announcement date .................................................................................................................. 4 August 2014

Shares quoted ex-dividend in London, Hong Kong, Paris and Bermuda ............. ............. .............. ............. ............ . 20 August 2014

ADSs quoted ex-dividend in New York ................................................................................................................... 20 August 2014Dividend record date in Hong Kong ......................................................................................................................... 21 August 2014

Dividend record date in London, New York, Paris and Bermuda ............................................................................. 22 August 2014

Dividend payment date ............................................................................................................................................. 9 October 2014

Cautionary statement regarding forward-lookingstatements

The Interim Management Statement contains certain forward-looking statements with respect to HSBC’s financial condition,results of operations, capital position and business.

Statements that are not historical facts, includingstatements about HSBC’s beliefs and expectations, areforward-looking statements. Words such as ‘expects’,‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’,

‘potential’ and ‘reasonably possible’, variations of these wordsand similar expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and therefore undue relianceshould not be placed on them. Forward-looking statementsspeak only as of the date they are made. HSBC makes nocommitment to revise or update any forward-lookingstatements to reflect events or ci rcumstances occurring orexisting after the date of any forward-looking statements.

Written and/or oral forward-looking statements mayalso be made in the periodic reports to the US Securitiesand Exchange Commission, summary financial statementsto shareholders, proxy statements, offering circulars and prospectuses, press releases and other written materials, andin oral statements made by HSBC’s Directors, officers or

employees to third parties, including financial analysts.Forward-looking statements involve inherent risks and

uncertainties. Readers are cautioned that a number of factorscould cause actual results to differ, in some instancesmaterially, from those anticipated or implied in any forward-looking statement. These include, but are not limited to:

changes in general economic conditions in the markets inwhich we operate, such as continuing or deepeningrecessions and fluctuations in employment beyond thosefactored into consensus forecasts; changes in foreignexchange rates and interest rates; volatility in equitymarkets; lack of liquidity in wholesale funding markets;illiquidity and downward price pressure in national realestate markets; adverse changes in central banks’ policieswith respect to the provision of liquidity support to

financial markets; heightened market concerns oversovereign creditworthiness in over-indebted countries;adverse changes in the funding status of public or private

defined benefit pensions; and consumer perception as tothe continuing availability of credit and price competitionin the market segments we serve;

changes in government policy and regulation, includingthe monetary, interest rate and other policies of central banks and other regulatory authorities; initiatives tochange the size, scope of activities and interconnectednessof financial institutions in connection with theimplementation of stricter regulation of financialinstitutions in key markets worldwide; revised capital andliquidity benchmarks which could serve to deleverage bank balance sheets and lower returns available from thecurrent business model and portfolio mix; impositionof levies or taxes designed to change business mix andrisk appetite; the practices, pricing or responsibilities offinancial institutions serving their consumer markets;expropriation, nationalisation, confiscation of assets andchanges in legislation relating to foreign ownership;changes in bankruptcy legislation in the principal marketsin which we operate and the consequences thereof;general changes in government policy that maysignificantly influence investor decisions; extraordinarygovernment actions as a result of current market turmoil;other unfavourable political or diplomatic developments producing social instability or legal uncertainty which inturn may affect demand for our products and services;

the costs, effects and outcomes of product regulatoryreviews, actions or litigation, including any additionalcompliance requirements; and the effects of competitionin the markets where we operate including increasedcompetition from non-bank financial services companies,including securities firms; and

factors specific to HSBC, including discretionary risk-weighted asset growth and our success in adequatelyidentifying the risks we face, such as the incidence ofloan losses or delinquency, and managing those risks(through account management, hedging and othertechniques). Effective risk management depends on,among other things, our ability through stress testing andother techniques to prepare for events that cannot becaptured by the statistical models it uses; and our success

in addressing operational, legal and regulatory, andlitigation challenges, notably compliance with theDeferred Prosecution Agreements with US authorities.





12

Summary consolidated income statement

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013US$m US$m US$m US$m US$m

Net interest income .... ............. ............. ............. ............. ........... 8,721 9,006 8,714 8,851 8,968

Net fee income ......... ............. ............. ............. ............. ............. 4,046 3,993 4,037 4,159 4,245

Net trading income ............. ............. ............. ............. ............. .. 2,280 1,045 1,283 2,519 3,843

Changes in fair value of long-term debt issued and related

derivatives ............................................................................ 203 (275) 466 38 (1,457)

Net income/(expense) from other financial instruments

designated at fair value ......................................................... 305 793 981 (331) 553

Net income/(expense) from financial instruments designated

at fair value ........................................................................... 508 518 1,447 (293) (904)

Gains less losses from financial investments ............. ............. .. 184 136 20 246 1,610

Dividend income ....................................................................... 24 44 171 73 34

Net earned insurance premiums ............. ............. ............. ......... 3,136 2,665 3,049 3,054 3,172

Other operating income/(expense) ............................................ 328 1,213 473 (55) 1,001

Total operating income ........................................................... 19,227 18,620 19,194 18,554 21,969

Net insurance claims incurred and movement in liabilities to

policyholders ............. .............. ............ ............. .............. ...... (3,343) (3,425) (4,116) (2,598) (3,553)

Net operating income before loan impairment charges

and other credit risk provisions ......................................... 15,884 15,195 15,078 15,956 18,416

Loan impairment charges and other credit risk provisions ........ (798) (1,140) (1,593) (1,945) (1,171)

Net operating income .............................................................. 15,086 14,055 13,485 14,011 17,245

Total operating expenses ........................................................... (8,852) (10,573) (9,584) (9,052) (9,347)

Operating profit ...................................................................... 6,234 3,482 3,901 4,959 7,898

Share of profit in associates and joint ventures ............ ............. 551 482 629 678 536Profit before tax ...................................................................... 6,785 3,964 4,530 5,637 8,434

Tax expense .............................................................................. (1,275) (995) (1,045) (1,401) (1,324)

Profit after tax ......................................................................... 5,510 2,969 3,485 4,236 7,110

Profit attributable to shareholders of the parent company ......... 5,211 2,720 3,200 3,931 6,353

Profit attributable to non-controlling interests ........................... 299 249 285 305 757

US$ US$ US$ US$ US$

Basic earnings per ordinary share ............ ............. .............. ...... 0.27 0.14 0.16 0.20 0.34

Diluted earnings per ordinary share .............. ............. ............. .. 0.27 0.14 0.16 0.20 0.33

Dividend per ordinary share (in respect of the period) . ............. 0.10 0.19 0.10 0.10 0.10

% % % % %

Return on average ordinary shareholders’ equity (annualised) . 11.7 5.9 7.2 9.1 14.9

Pre-tax RoRWA (annualised) ................................................... 2.3 1.4 1.6 2.1 3.1

Cost efficiency ratio .................................................................. 55.7 69.6 63.6 56.7 50.8





13

Summary consolidated balance sheet

At

31 March

2014

At

31 December

2013

At

30 June

2013US$m US$m US$m

ASSETS

Cash and balances at central banks ........ ............. ............. .............. ............. ............. 165,838 166,599 148,285

Trading assets .......................................................................................................... 355,193 303,192 432,601

Financial assets designated at fair value ............. ............. .............. ............. ............. 39,874 38,430 35,318

Derivatives ............................................................................................................... 270,353 282,265 299,213

Reverse repurchase agreements – non-trading ......................................................... 205,332 179,690 88,400

Loans and advances to banks ................................................................................... 129,530 120,046 127,810

Loans and advances to customers ............ ............. .............. ............. ............. ........... 1,009,830 992,089 938,294

Financial investments .............................................................................................. 418,178 425,925 404,214

Assets held for sale .................................................................................................. 3,936 4,050 20,377

Other assets .............................................................................................................. 160,383 159,032 150,804

Total assets .............................................................................................................. 2,758,447 2,671,318 2,645,316

LIABILITIES AND EQUITY

Liabilities

Repurchase agreements – non-trading ............ ............. ............. ............. ............. ..... 218,379 164,220 66,591

Deposits by banks .................................................................................................... 89,492 86,507 92,709

Customer accounts ................................................................................................... 1,366,034 1,361,297 1,266,905

Trading liabilities ..................................................................................................... 241,455 207,025 342,432

Financial liabilities designated at fair value ...... ............. ............. .............. ............. .. 87,767 89,084 84,254

Derivatives ............................................................................................................... 260,991 274,284 293,669

Debt securities in issue ............. .............. ............ ............. .............. ............. ............. 102,395 104,080 109,389

Liabilities under insurance contracts ........................................................................ 76,055 74,181 69,771

Liabilities of disposal groups held for sale ............................................................... 2,003 2,804 19,519

Other liabilities ........................................................................................................ 121,428 117,377 117,716

Total liabilities ......................................................................................................... 2,565,999 2,480,859 2,462,955

Equity

Total shareholders’ equity ........................................................................................ 183,945 181,871 174,070

Non-controlling interests ............. ............. ............ .............. ............. ............. ........... 8,503 8,588 8,291

Total equity .............................................................................................................. 192,448 190,459 182,361

Total equity and liabilities ............... ............. ............. ............. ............. ............. ....... 2,758,447 2,671,318 2,645,316

Ratio of customer advances to customer accounts .............. ............. ............. ........... 73.9% 72.9% 74.1%





14

Capital

Capital structure

CRD IV year 1 transition Basel 2.5

At

31 March

2014

Estimated at

31 December

2013

At

31 December

2013

At

30 June

2013

US$m US$m US$m US$m

Composition of regulatory capital

Shareholders’ equity per balance sheet1 ...................................... 183,945 181,871 181,871 174,070

Non-controlling interests ............. ............. ............ .............. ........ 3,564 3,644 4,955 4,754

Regulatory adjustments to the accounting basis .......................... (15,839) (18,313) (7,942) (8,076)

Deductions .................................................................................. (36,932) (35,969) (29,833) (29,858)

Common equity/core tier 1 capital .......................................... 134,738 131,233 149,051 140,890

Other tier 1 capital before deductions .. ............. ............. ............. 14,552 14,573 16,110 15,790

Deductions .................................................................................. (165) (165) (7,006) (6,538)

Tier 1 capital ............................................................................. 149,125 145,641 158,155 150,142Total qualifying tier 2 capital before deductions ......................... 39,356 35,786 47,812 45,009

Total deductions other than from tier 1 capital ............ ............. .. (248) (248) (11,958) (11,701)

Total regulatory capital ............................................................ 188,233 181,179 194,009 183,450

Total risk-weighted assets ........................................................ 1,257,672 1,214,939 1,092,653 1,104,764

% % % %

Capital ratios

Common equity tier 1 ratio ......................................................... 10.7 10.8

Core tier 1 ratio ............ ............. ............. ............. ............. ........... 13.6 12.7

Tier 1 ratio .................................................................................. 11.9 12.0 14.5 13.6

Total capital ratio ........................................................................ 15.0 14.9 17.8 16.6

1 Includes externally verified profits for the period ended 31 March 2014.

Reconciliation of regulatory capital from Year 1 transitional basis to an estimated CRD IV end point basis

At

31 March

Estimated at

31 December2014 2013

US$m US$m

Common equity tier 1 capital on a year 1 transitional basis .................................................................. 134,738 131,233Unrealised gains arising from revaluation of property ............................................................................ 1,273 1,281

Common equity tier 1 capital end point basis ......................................................................................... 136,011 132,514

Additional tier 1 capital on a year 1 transitional basis ........................................................................... 14,387 14,408Grandfathered instruments:

Preference share premium ............. ............. ............. ............. ............. ............. .............. ............. ............. (1,160) (1,160)Preference share non-controlling interests .............................................................................................. (1,955) (1,955)

Hybrid capital securities ......................................................................................................................... (10,727) (10,727)Transitional provisions:

Allowable non-controlling interest in AT1 ............................................................................................. (335) (366)Unconsolidated investments ................................................................................................................... 165 165

Additional tier 1 capital end point basis .................................................................................................. 375 365

Tier 2 capital on a year 1 transitional basis ............................................................................................ 39,108 35,538Grandfathered instruments:

Perpetual subordinated debt .................................................................................................................... (2,218) (2,218)Term subordinated debt .......................................................................................................................... (21,513) (21,513)

Transitional provisions:

Non-controlling interest in tier 2 capital .............. ............. ............. ............. ............. ............. .............. .... (240) (240)Allowable non-controlling interest in tier 2 ............................................................................................ 288 345Unconsolidated investments ................................................................................................................... (165) (165)

Tier 2 capital end point basis ................................................................................................................... 15,260 11,747





15

Capital and RWA movements by major driver – CRD IV end point basis

Common

equity

tier 1 capital RWAsUS$bn US$bn

CRD IV end point basis at 1 January 2014 .............. ............. ............. ............. ............. ............. ............ 132.5 1,214.9

Contribution to CET1 capital from profit .............................................................................................. 5.1 –

First interim dividend1, net of planned scrip ............ ............. ............. ............. ............. ............. ............ (1.7) –

Fourth interim dividend2 scrip take-up in excess of plan ....................................................................... 1.1 –

Implementation of PRA LGD floors ..................................................................................................... (0.2) 34.4

Lending growth ..................................................................................................................................... – 7.6

Other ..................................................................................................................................................... (0.8) 0.8

CRD IV end point basis at 31 March 2014 .............. ............. ............. ............. ............. ............. ............ 136.0 1,257.7

1 In respect of 2014. This includes dividends declared on ordinary shares, quarterly dividends on preference shares and coupons on

capital securities, classified as equity.2 In respect of 2013.

Risk-weighted assets

RWAs by risk type

CRD IV transition and end point Basel 2.5

At At At

31 Mar 2014 31 Dec 2013 31 Dec 2013

US$bn US$bn US$bn

Credit risk ................................................................................................................ 965.9 936.5 864.3

Counterparty credit risk ........................................................................................... 107.2 95.8 45.8

Market risk .............................................................................................................. 66.2 63.4 63.4

Operational risk ....................................................................................................... 118.4 119.2 119.2

1,257.7 1,214.9 1,092.7

RWAs by global businesses

CRD IV

transition and

end point Basel 2.5 at

31 Mar 2014 31 Dec 2013

US$bn US$bn

Retail Banking and Wealth Management .............................................................................................. 226.6 233.5

Commercial Banking ............................................................................................................................ 414.6 391.7

Global Banking and Markets .................... ............ .............. ............. ............. ............. ............. ............. . 553.5 422.3

Global Private Banking ......................................................................................................................... 23.2 21.7

Other ..................................................................................................................................................... 39.8 23.5

1,257.7 1,092.7

RWAs by geographical regions

CRD IV

transition and

end point Basel 2.5 at

31 Mar 2014 31 Dec 2013

US$bn US$bn

Total .................................................................................................................................................... 1,257.7 1,092.7

Europe .................................................................................................................................................. 401.1 300.1

Asia ...................................................................................................................................................... 475.5 430.7

Middle East and North Africa ............................................................................................................... 64.3 62.5

North America ............. ............. ............. ............. ............. .............. ............. ............. ............. ............. ... 243.3 223.8

Latin America ....................................................................................................................................... 94.6 89.5

1 RWAs are non-additive across geographical regions due to market risk diversification effects within the Group.





16

Credit risk exposure – RWAs by geographical region

Europe Asia MENA

North

America

Latin

America Total

US$bn US$bn US$bn US$bn US$bn US$bn

RWAs at 31 March 2014

IRB advanced approach ................... 220.8 208.4 13.1 158.8 11.1 612.2

IRB foundation approach ................. 10.1 – 4.1 – – 14.2

Standardised approach ..................... 46.2 167.1 39.7 29.4 57.1 339.5

277.1 375.5 56.9 188.2 68.2 965.9

RWAs at 31 December 2013

IRB advanced approach ............ ....... 157.1 182.9 11.2 161.5 8.5 521.2

IRB foundation approach ............. .... 9.8 – 3.8 – – 13.6

Standardised approach ............ ......... 44.5 165.9 40.0 22.7 56.4 329.5

211.4 348.8 55.0 184.2 64.9 864.3

Credit risk exposure – RWAs by global businesses

RetailBanking and

Wealth

Management

Commercial

Banking

GlobalBanking

and

Markets

Global

Private

Banking Other Total


RWAs at 31March 2014

IRB advanced approach ................... 125.4 197.2 257.2 11.6 20.8 612.2

IRB foundation approach ................. – 6.5 6.4 0.1 1.2 14.2

Standardised approach ..................... 63.2 178.1 73.9 6.8 17.5 339.5

188.6 381.8 337.5 18.5 39.5 965.9

RWAs at 31 December 2013

IRB advanced approach ............ ....... 131.0 183.2 192.8 10.4 3.8 521.2

IRB foundation approach ............. .... – 6.3 5.8 0.1 1.4 13.6

Standardised approach ............ ......... 63.7 169.3 71.6 6.9 18.0 329.5

194.7 358.8 270.2 17.4 23.2 864.3

RWA movement by geographical region by key driver – credit risk – IRB only

Europe Asia MENA

North

America

Latin

America Total


RWAs at 1 January 2014 on Basel 2.5 basis ...... 166.9 182.9 15.0 161.5 8.5 534.8

Foreign exchange movement ............................. 2.3 0.6 – (0.9) (0.5) 1.5

Acquisitions and disposals ................................. (0.2) – – – (0.1) (0.3)

Book size ........................................................... 3.1 2.5 (0.2) 0.7 0.9 7.0

Book quality ...................................................... (1.5) 2.3 0.5 (1.7) 0.3 (0.1)

Model updates ................................................... 14.9 0.3 – (4.9) – 10.3

– portfolios moving onto IRB approach ........ – – – – – – – new/updated models ............ ............. ......... 14.9 0.3 – (4.9) – 10.3

Methodology and policy .................................... 45.4 19.8 1.9 4.1 2.0 73.2

– internal updates .................... ............ .......... (2.2) (5.5) – (2.4) – (10.1)

– external updates – regulatory ..... ............. ... 2.2 6.7 0.2 0.7 0.1 9.9

– CRD IV impact ........... ............. ............. ..... 37.0 5.7 0.4 4.9 0.2 48.2

– NCOA moving from STD to IRB ............. . 8.4 12.9 1.3 0.9 1.7 25.2

Total RWA movement ....................................... 64.0 25.5 2.2 (2.7) 2.6 91.6

RWAs at 31 March 2014 on CRD IV basis ....... 230.9 208.4 17.2 158.8 11.1 626.4





17

Europe Asia MENA North

AmericaLatin

America TotalUS$bn US$bn US$bn US$bn US$bn US$bn

RWAs at 1 January 2013 on Basel 2.5 basis ...... 150.7 162.3 12.6 187.1 11.2 523.9

Foreign exchange movement ............. ............. ... (6.5) (0.4) (0.3) (0.6) 0.1 (7.7)Acquisitions and disposals ............. ............. ....... (1.4) – – – – (1.4)Book size ............ .............. ............ ............. ........ 3.9 4.7 0.9 (4.4) (0.3) 4.8Book quality ............ ............. ............. ............. ... (0.4) 0.7 1.9 (2.8) 0.1 (0.5)Model updates ............. ............. ............. ............ – – – (0.2) – (0.2)

– portfolios moving onto IRB approach ........ – – – – – – – new/updated models ............ ............. ......... – – – (0.2) – (0.2)

Methodology and policy .............. ............. ......... 4.7 6.4 – 11.0 – 22.1

– internal updates .................... ............ .......... 2.3 – – 0.8 – 3.1

– external updates – regulatory ..... ............. ... 2.4 6.4 – 10.2 – 19.0

Total RWA movement ............ ............. ............. . 0.3 11.4 2.5 3.0 (0.1) 17.1

RWAs at 31 March 2013 on Basel 2.5 basis ...... 151.0 173.7 15.1 190.1 11.1 541.0

RWA movement by global businesses by key driver – credit risk – IRB only

Principal

RBWM

US

run-off

portfolio

Total

RBWM CMB GB&M GPB Other Total

US$bn US$bn US$bn US$bn US$bn US$bn US$bn US$bn

RWAs at 1 January 2014 onBasel 2.5 basis ............. ........ 58.4 72.6 131.0 189.5 198.5 10.6 5.2 534.8

Foreign exchange movement .. .. (0.1) – (0.1) 0.4 1.2 – – 1.5

Acquisitions and disposals .... .... – – – – (0.3) – – (0.3)

Book size .................................. 1.1 (1.3) (0.2) 4.3 3.1 (0.2) – 7.0

Book quality ............................. (1.1) (2.0) (3.1) 2.1 0.7 (0.1) 0.3 (0.1)

Model updates .......................... 0.3 (4.9) (4.6) 9.2 5.4 0.3 – 10.3

– portfolios moving ontoIRB approach ................. – – – – – – – –

– new/updated models ......... 0.3 (4.9) (4.6) 9.2 5.4 0.3 – 10.3

Methodology and policy ... ........ 2.4 – 2.4 (1.8) 55.0 1.1 16.5 73.2

– internal updates ................. (2.6) – (2.6) (5.6) (1.9) – – (10.1)

– external updates –regulatory ...................... – – – 2.7 6.5 0.5 0.2 9.9

– CRD IV impact ........... ...... – – – (0.7) 48.6 0.2 0.1 48.2

– NCOA moving fromSTD to IRB .................... 5.0 – 5.0 1.8 1.8 0.4 16.2 25.2

Total RWA movement .............. 2.6 (8.2) (5.6) 14.2 65.1 1.1 16.8 91.6

RWAs at 31 March 2014on CRD IV basis ................... 61.0 64.4 125.4 203.7 263.6 11.7 22.0 626.4

RWA movement by key driver

Counterparty credit risk – IRB only

2014 2013US$bn US$bn

RWAs at 1 January .......................... 42.2 45.7

Book size ......................................... 3.4 (0.4)Book quality .................................... (0.4) (0.5)Model updates ................................. 2.2 –Methodology and policy .................. 7.5 (0.4)

– internal updates .................... .... (0.6) (0.4) – external updates – regulatory ... 8.1 –

CRD IV impact ................................ 40.9 –

Total RWA movement ..................... 53.6 (1.3)

RWAs at 31 March .......................... 95.8 44.4

RWA movement by key driver

Market risk – internal model based

2014 2013US$bn US$bn

RWAs at 1 January .......................... 52.2 44.5

Movement in risk levels ............ ...... (0.5) (6.3)Model updates ................................. – –Methodology and policy .................. 0.5 2.3

– internal updates ............ ........... 0.5 – – external updates – regulatory ... – 2.3

Total RWA movement .............. ...... – (4.0)

RWAs at 31 March .......................... 52.2 40.5





18

Estimated leverage ratio

The table below presents our estimated leverage ratio, based on the approach prescribed by the PRA. This has been

calculated consistently with the basis of preparation outlined in our Annual Report and Accounts 2013, which can be

found on our website www.hsbc.com.

PRA-prescribed basis

At

31 March

2014

At

31 December

2013

US$bn US$bn

Total assets per financial balance sheet ................................................................................................. 2,758 2,671

Adjustment to reverse netting of loans and deposits allowable under IFRSs ............. ............. ............. . 75 93

Reversal of accounting values ............................................................................................................... (498) (482)

– derivatives ............ ............. ............. ............. ............. .............. ............. ............. ............. ............. ... (270) (282)

– repurchase agreement and securities finance ............ .............. ............. ............. ............. ............. ... (228) (200)

Replaced with regulatory values ........................................................................................................... 387 386

– derivatives ............ ............. ............. ............. ............. .............. ............. ............. ............. ............. ... 229 239

– repurchase agreement and securities finance ............ .............. ............. ............. ............. ............. ... 158 147

Addition of off-balance sheet commitments and guarantees ................................................................. 400 388

Exclusion of items already deducted from the capital measure ............................................................. (30) (28)

Exposure measure after regulatory adjustments ............................................................................. 3,092 3,028

Tier 1 capital under CRD IV (end point) ............ ............. .............. ............. ............. ............. ............. ... 136 133

Estimated leverage ratio (end point) ................................................................................................. 4.4% 4.4%

Tier 1 capital under CRD IV (including instruments which will be ineligible for inclusion after

Basel III transitional period has fully elapsed) .................................................................................. 151 149

Estimated leverage ratio (including instruments which will be ineligible for inclusion after

Basel III transitional period has fully elapsed) ............................................................................. 4.9% 4.9%

Profit/(loss) before tax by global business and geographical region

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013

US$m US$m US$m US$m US$m

By global business

Retail Banking and Wealth Management .................................. 1,712 1,797 1,585 1,700 1,567

Commercial Banking ................................................................ 2,420 2,426 1,882 1,946 2,187

Global Banking and Markets .... .............. ............. ............ ......... 2,871 1,866 1,852 2,135 3,588

Global Private Banking ............................................................. 201 101 (16) 233 (125)

Other ......................................................................................... (419) (2,226) (773) (377) 1,217

6,785 3,964 4,530 5,637 8,434

By geographical regionEurope ...................................................................................... 1,760 (898) (45) 973 1,795

Asia ........................................................................................... 3,764 2,991 3,600 3,748 5,514

Middle East and North Africa ................................................... 502 406 379 385 524

North America ............. ............. ............. ............. ............. ......... 449 179 376 526 140

Latin America ........................................................................... 310 1,286 220 5 461

6,785 3,964 4,530 5,637 8,434





19

Summary information – global businesses

Retail Banking and Wealth Management

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013




Loan impairment charges and other credit risk provisions ........ (604) (686) (773) (878) (890)




Share of profit in associates and joint ventures ............ ............. 88 94 93 114 83

Profit before tax ...................................................................... 1,712 1,797 1,585 1,700 1,567

Profit before tax relates to:

Principal RBWM .................................................................. 1,762 1,865 1,483 1,614 1,887

US run-off portfolio1 ............................................................. (50) (68) 102 86 (320)

1 31 March 2013 includes the loss on sale and results of the US Insurance business.


Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013


Reported profit before tax ......................................................... 1,712 1,797 1,585 1,700 1,567

Currency translation adjustment ............ ............. ............. ......... 2 11 49 (8)

Acquisitions, disposals and dilutions ........................................ (5) (313) (4) (14) 88Underlying profit before tax ............ ............. ............. ............. .. 1,707 1,486 1,592 1,735 1,647

% % % % %


Reported pre-tax RoRWA (annualised) .................................... 3.0 3.0 2.6 2.7 2.4

Reconciliation of reported and underlying Principal RBWM profit before tax

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013



Currency translation adjustment ............ ............. ............. ......... 2 11 49 (8)Acquisitions, disposals and dilutions ........................................ (5) (313) (4) (14) (32)

Underlying profit before tax ............ ............. ............. ............. .. 1,757 1,554 1,490 1,649 1,847





20

Commercial Banking

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar











Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013



Currency translation adjustment ............ ............. ............. ......... (5) – 25 (13)

Acquisitions, disposals and dilutions ........................................ (7) (486) (11) (21) (21)


% % % % %



Management view of revenue

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013


Global Trade and Receivables Finance1 .................................... 686 713 757 746 713

Credit and lending ................ ............. ............. ............. ............. 1,494 1,541 1,554 1,520 1,488

Payments and Cash Management1, current accounts and

savings deposits .................................................................... 1,322 1,363 1,345 1,304 1,275

Other ......................................................................................... 508 900 329 360 457

Net operating income2 .............................................................. 4,010 4,517 3,985 3,930 3,933

1 ‘Global Trade and Receivables Finance’ and ‘Payments and Cash Management’ include revenue attributable to foreign exchange

products.2 Net operating income before loan impairment charges and other credit risk provisions, also referred to as revenue.





21

Global Banking and Markets

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013

US$m US$m US$m US$m US$mNet operating income before loan impairment charges


Loan impairment (charges)/recoveries and other credit risk

provisions ............ ............. ............. ............. ............. ............. (3) 85 (118) (219) 45







Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013



Currency translation adjustment ............ ............. ............. ......... (32) (25) (40) (26)

Acquisitions, disposals and dilutions ........................................ (5) (324) (69) 10 (19)


% % % % %



Management view of total operating income1,2

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013


Markets ..................................................................................... 2,225 1,290 1,575 1,839 2,231

Credit .................................................................................... 347 154 154 183 305

Rates ..................................................................................... 631 40 507 377 729

Foreign Exchange ................................................................. 803 693 660 962 871

Equities ................................................................................. 444 403 254 317 326

Capital Financing ...................................................................... 997 977 975 988 1,054

Payments and Cash Management ............ ............. .............. ...... 444 472 436 439 423

Securities Services .................................................................... 413 407 408 442 405

Global Trade and Receivables Finance ..................................... 187 181 189 191 180

Balance Sheet Management ...................................................... 750 719 711 704 976

Principal Investments ................................................................ 94 165 142 172 33Debit valuation adjustment ....................................................... 31 (195) (151) (21) 472

Other ......................................................................................... 19 278 (65) 92 42

Net operating income3 .............................................................. 5,160 4,294 4,220 4,846 5,816

By geographical region

Europe ........................................................................................ 1,992 1,312 1,432 1,765 2,525

Asia ............................................................................................ 1,883 1,640 1,640 1,765 1,943Middle East and North Africa ..................................................... 253 202 216 197 212

North America ............. ............. ............. ............. ............. ........... 678 541 606 746 774

Latin America ............................................................................. 399 654 369 390 402

Intra-HSBC items ....................................................................... (45) (55) (43) (17) (40)

Net operating income3 ................................................................ 5,160 4,294 4,220 4,846 5,816

1 The management view of income reflects the management structure of GB&M which has been in place since 12 August 2013.

Comparatives have been re-presented for this change.2 Figures on a reported basis, unless otherwise stated.

3 Net operating income before loan impairment charges and other credit risk provisions, also referred to as ‘revenue’.





22

Global Private Banking

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013

US$m US$m US$m US$m US$mNet operating income before loan impairment charges

and other credit risk provisions ......................................... 633 630 658 707 444


provisions ............ ............. ............. ............. ............. ............. 5 4 (21) (7) (7)

Net operating income .............................................................. 638 634 637 700 437

Total operating expenses ........................................................... (441) (537) (657) (469) (566)

Operating profit/(loss) ............................................................ 197 97 (20) 231 (129)


Profit/(loss) before tax ............................................................ 201 101 (16) 233 (125)

Reconciliation of reported and underlying profit/(loss) before tax

Quarter ended

31 Mar

2014

31 Dec2013

30 Sep2013

30 Jun2013

31 Mar2013


Reported profit/(loss) before tax ............................................... 201 101 (16) 233 (125)

Currency translation adjustment ............ ............. ............. ......... 1 2 4 1

Acquisitions, disposals and dilution .......................................... – (1) – – –

Underlying profit/(loss) before tax ............................................ 201 101 (14) 237 (124)

% % % % %


Reported pre-tax RoRWA (annualised) .................................... 3.6 1.8 (0.3) 4.3 (2.3)

Client assets1 by geography

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013

US$bn US$bn US$bn US$bn US$bn

Europe ........................................................................................ 195 197 205 203 214

Asia ............................................................................................ 109 108 106 104 106

North America ............. ............. ............. ............. ............. ........... 65 65 65 64 67

Latin America ............................................................................. 12 12 14 15 16

Total ........................................................................................... 381 382 390 386 403

Client assets1

Quarter ended

31 Mar2014

31 Dec2013

30 Sep2013

30 Jun2013

31 Mar2013

US$bn US$bn US$bn US$bn US$bn

Opening balance ......................................................................... 382 390 386 403 398

Net new money .......... ............. ............. ............. ............. ............. (2) (11) (5) (9) (1)

Value change .............................................................................. 3 5 7 (7) 7Exchange and other ..................................................................... (2) (2) 2 (1) (1)

Closing balance ........................................................................... 381 382 390 386 403

1 ‘Client assets’ are translated at the rates of exchange applicable for their respective period-ends, with the effects of currency translationreported separately. The main components of client assets are funds under management, which are not reported on the Group’s balance

sheet, and customer deposits, which are reported on the Group’s balance sheet.





23

Other1

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013


Net operating income before loan impairment charges and

other credit risk provisions ................................................ 1,217 492 1,009 1,329 2,821

– of which effect of changes in own credit spread on the

fair value of long-term debt issued ............. ............. ......... 148 (652) (575) 224 (243)


provisions ............ ............. ............. ............. ............. ............. 1 – – (39) 39

Net operating income .............................................................. 1,218 492 1,009 1,290 2,860


Operating profit/(loss) ............................................................ (421) (2,208) (775) (383) 1,221

Share of profit/(loss) in associates and joint ventures ............. .. 2 (18) 2 6 (4)

Profit/(loss) before tax ............................................................ (419) (2,226) (773) (377) 1,217


Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013


Reported profit/(loss) before tax ............................................... (419) (2,226) (773) (377) 1,217


Own credit spread ..................................................................... (148) 652 575 (224) 243

Acquisitions, disposals and dilutions ........................................ 1 43 14 – (1,069)

Underlying profit/(loss) before tax ............................................ (566) (1,532) (187) (623) 370

1 The main items reported under ‘Other’ are the results of HSBC’s holding company and financing operations, which include net interest

earned on free capital held centrally, operating costs incurred by the head office operations in providing stewardship and central

management services to HSBC, along with the costs incurred by the Group Service Centres and Shared Service Organisations andassociated recoveries. The results also include fines and penalties as part of the settlement of investigations into past inadequate

compliance with anti-money laundering and sanctions laws, the UK bank levy and unallocated investment activities, centrally held

investment companies, gains arising from the dilution of interests in associates and joint ventures and certain property transactions. Inaddition, ‘Other’ includes part of the movement in the fair value of long-term debt designated at fair value (the remainder of the

Group’s movement on own debt is included in GB&M).







25

Asia

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar











Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013




Own credit spread ..................................................................... – – 2 (3) 2

Acquisitions, disposals and dilutions ........................................ – 35 4 4 (1,129)


% % % % %



Reconciliation of reported and underlying Hong Kong profit before tax

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013



Currency translation adjustment ............ ............. ............. ......... (1) (3) 2 1


Profit/(loss) before tax by global business

Quarter ended31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013


Retail Banking and Wealth Management .................................. 1,156 1,042 1,079 1,059 1,239

Commercial Banking ................................................................ 1,154 979 1,169 1,196 1,114

Global Banking and Markets .... .............. ............. ............ ......... 1,295 1,000 1,069 1,230 1,376

Global Private Banking ............................................................. 70 33 74 85 92

Other ......................................................................................... 89 (63) 209 178 1,693

Profit before tax ........................................................................ 3,764 2,991 3,600 3,748 5,514





26

Middle East and North Africa

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar



and other credit risk provisions ......................................... 652 607 643 621 632


provisions ............ ............. ............. ............. ............. ............. 22 48 (53) (15) 62

Net operating income .............................................................. 674 655 590 606 694

Total operating expenses ........................................................... (295) (365) (308) (335) (281)

Operating profit ...................................................................... 379 290 282 271 413


Profit before tax ...................................................................... 502 406 379 385 524


Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013


Reported profit before tax ......................................................... 502 406 379 385 524

Currency translation adjustment ............ ............. ............. ......... (1) – 1 (4)

Own credit spread ..................................................................... 5 1 2 (2) 3

Underlying profit before tax ............ ............. ............. ............. .. 507 406 381 384 523

% % % % %




Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013


Retail Banking and Wealth Management .................................. 82 19 59 90 90

Commercial Banking ................................................................ 181 164 130 159 192

Global Banking and Markets .... .............. ............. ............ ......... 244 239 219 155 256


Other ......................................................................................... (9) (21) (33) (21) (19)

Profit before tax ........................................................................ 502 406 379 385 524





27

North America

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar







Operating profit ...................................................................... 446 163 367 525 135


Profit before tax ...................................................................... 449 179 376 526 140


Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013


Reported profit before tax ......................................................... 449 179 376 526 140


Own credit spread ..................................................................... (4) 114 89 (62) 84

Acquisitions, disposals and dilutions ........................................ – – (17) – 120

Underlying profit before tax ............ ............. ............. ............. .. 445 281 434 451 320

% % % % %




Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013


Retail Banking and Wealth Management .................................. (14) (95) 58 110 (280)

Principal RBWM .................................................................. 36 (27) (44) 24 40

Run-off portfolio1 ................................................................. (50) (68) 102 86 (320)

Commercial Banking ................................................................ 233 244 225 131 186



Other ......................................................................................... (60) (66) (71) (44) (163)Profit before tax ........................................................................ 449 179 376 526 140

1 31 March 2013 includes the loss on sale and results of the US Insurance business.





28

Latin America

Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar







Operating profit ...................................................................... 310 1,286 220 5 461

Share of profit in associates and joint ventures ............ ............. – – – – –

Profit before tax ...................................................................... 310 1,286 220 5 461


Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013


Reported profit before tax ......................................................... 310 1,286 220 5 461


Acquisitions, disposals and dilutions ........................................ (16) (1,116) (17) (49) (14)

Underlying profit/(loss) before tax ............................................ 294 140 169 (64) 375

% % % % %


Reported pre-tax RoRWA (annualised) .................................... 1.4 5.4 0.9 – 1.9


Quarter ended

31 Mar

2014

31 Dec

2013

30 Sep

2013

30 Jun

2013

31 Mar

2013


Retail Banking and Wealth Management .................................. (27) 389 34 (115) 118

Commercial Banking ................................................................ 106 399 (4) (81) 150


Global Private Banking ............................................................. 1 (3) (2) 2 4

Other ......................................................................................... (16) (4) (26) (6) (50)

Profit before tax ........................................................................ 310 1,286 220 5 461




Appendix – selected information (continued)

Loans and advances to customers by industry sector and by geographical region

Europe Asia

Middle

East andNorthAfrica

NorthAmerica

LatinAmerica

Gross

loans andadvances to

customers

Grossloans byindustry

sector as a% of total

gross loansUS$m US$m US$m US$m US$m US$m %

At 31 March 2014Personal ............................................... 192,554 126,018 6,475 69,746 15,007 409,800 40.0

First lien residential mortgages ... ..... 141,385 93,175 2,521 58,554 4,244 299,879 29.3Other personal ................................. 51,169 32,843 3,954 11,192 10,763 109,921 10.7

Corporate and commercial ................... 245,330 211,809 19,296 52,107 31,285 559,827 54.7

Manufacturing ................................. 60,191 32,728 2,506 12,547 13,012 120,984 11.8International trade and services ....... 76,770 79,031 9,255 12,430 8,306 185,792 18.1Commercial real estate . ............. ...... 30,420 34,830 559 6,157 2,503 74,469 7.3Other property-related ..................... 8,458 28,625 1,391 8,370 327 47,171 4.6Government ..................................... 2,591 1,065 1,449 569 1,018 6,692 0.7Other commercial ............................ 66,900 35,530 4,136 12,034 6,119 124,719 12.2

Financial .............................................. 29,862 10,032 2,580 7,854 1,540 51,868 5.1 Non-bank financial institutions ........ 27,620 9,643 2,579 7,854 1,359 49,055 4.8Settlement accounts ......................... 2,242 389 1 – 181 2,813 0.3

Asset-backed securities reclassified ... .. 2,472 – – 139 – 2,611 0.2

Total gross loans and advances tocustomers1 ....................................... 470,218 347,859 28,351 129,846 47,832 1,024,106 100.0

At 31 December 2013Personal ............ ............. .............. ........ 192,107 124,529 6,484 72,690 14,918 410,728 40.8

First lien residential mortgages ........ 140,474 92,047 2,451 60,955 3,948 299,875 29.8Other personal .............. ............. ...... 51,633 32,482 4,033 11,735 10,970 110,853 11.0

Corporate and commercial ............. ...... 239,116 203,394 19,760 50,306 30,188 542,764 53.8

Manufacturing .............. ............. ...... 55,920 30,758 3,180 11,778 12,214 113,850 11.3International trade and services ....... 77,113 79,368 8,629 11,676 8,295 185,081 18.4Commercial real estate ............ ........ 31,326 34,560 639 5,900 2,421 74,846 7.4

Other property-related ............. ........ 7,308 27,147 1,333 8,716 328 44,832 4.4Government ............. ............. ........... 3,340 1,021 1,443 498 974 7,276 0.7Other commercial ............. ............. .. 64,109 30,540 4,536 11,738 5,956 116,879 11.6

Financial ............. .............. ............. ...... 27,872 10,188 2,532 9,056 1,376 51,024 5.1

Non-bank financial institutions ........ 26,315 9,858 2,532 9,056 1,277 49,038 4.9Settlement accounts ............ ............. 1,557 330 – – 99 1,986 0.2

Asset-backed securities reclassified ..... 2,578 – – 138 – 2,716 0.3

Total gross loans and advances tocustomers1 ............. ............. ............. 461,673 338,111 28,776 132,190 46,482 1,007,232 100.0

At 30 June 2013Personal ............ ............. .............. ........ 173,270 120,822 6,377 78,959 15,081 394,509 41.4

First lien residential mortgages ........ 127,434 90,080 2,296 66,277 3,561 289,648 30.4Other personal .............. ............. ...... 45,836 30,742 4,081 12,682 11,520 104,861 11.0

Corporate and commercial ............. ...... 211,128 198,075 21,416 48,327 30,451 509,397 53.4

Manufacturing .............. ............. ...... 46,202 30,244 3,409 9,609 12,128 101,592 10.6International trade and services ....... 66,317 77,798 9,458 13,082 7,771 174,426 18.3Commercial real estate ............ ........ 30,764 33,416 898 6,064 2,328 73,470 7.7Other property-related ............. ........ 7,403 23,715 1,526 7,725 285 40,654 4.3Government ............. ............. ........... 1,834 3,220 1,664 348 1,431 8,497 0.9Other commercial ............. ............. .. 58,608 29,682 4,461 11,499 6,508 110,758 11.6

Financial ............. .............. ............. ...... 26,896 8,931 1,822 7,470 1,364 46,483 4.8

Non-bank financial institutions ........ 25,362 8,171 1,821 7,470 1,273 44,097 4.6Settlement accounts ............ ............. 1,534 760 1 – 91 2,386 0.2

Asset-backed securities reclassified ..... 3,319 – – 147 – 3,466 0.4

Total gross loans and advances tocustomers1 ............. ............. ............. 414,613 327,828 29,615 134,903 46,896 953,855 100.0

1 The table previously included non-trading reverse repurchase agreement, which had been presented as part of ‘Loans and advances to

customers’. Consistent with the balance sheet presentation, non-trading reverse repurchase agreements are now reported separately

and have been excluded from gross loans and advances. Comparative data have been re-presented to reflect this change. Non-tradingreverse repurchase agreements with customers at 31 March 2014 were US$101,396m (31 December 2013: US$88,215m; 30 June 2013:

US$31,088m), the majority of which were transacted with non-bank financial institutions; 31 March 2014: US$100,221m (31 December

Documents

Interim Management Statement